I leave it up to you to comment on the achievements mentioned above. I think the previous posts and comments on rising price were clear enough that consumers are not satisfied with the recent direction of telecom sector in Pakistan.
Pakistan is in second place compared to other South Asian countries in terms of certain economic indicators according to a report from World Bank on global business ranking . The business rankings report highlights the business reforms which have been implemented in Pakistan and provides details of various aspects of starting and running a business. In terms of issues, energy shortage is one of the major problem in Pakistan just like other emerging economies.
Here’s a summary, taken from Dawn Blog.
A recent World Bank report has declared Pakistan as one of the top favourable economies in the world. The “Doing Business 2008″ report states that Pakistan is in second place compared to other South Asian countries in terms of certain economic indicators, such as: ease of doing business, dealing with licenses, and protecting investors.
Pakistan is quickly emerging as a powerhouse in the region, partly due to its fast paced IT industry. The government’s policies towards foreign investors have also contributed in helping the country stand out. These include 100 per cent foreign equity ownership, 100 per cent repatriation of profits for foreign investors and tax exemption for the sector till 2013.
An increasing number of foreign companies also prefer Pakistan for their outsourcing operations. This is due to the large pool of English-proficient professionals, cheap connectivity rates and competitive operational costs.
‘Doing Business 2008? is an annual report that evaluates the regulations that directly impact economic growth and provides objective measures of business regulations and their enforcement. The report evaluates business
activities based on regulation affecting the “10 stages” of a business’s life: starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.
Story via Telecom Grid Pakistan.
The last post about 3G in Pakistan had Mobilink’s presentation. Now lets take a look at the views of equipment makers like Huawei, ZTE and Ericsson. Obviously all of them were optimistic about 3G and they talked about the benefits and the smooth transition to 3G they can provide.
ZTE had a very well thought out set of slides. Here is how it was organized.
There was agreement that the key issue for WCDMA is handset pricing and infrastrucutre investment.
Does it make business sense to introduce 3G in Pakistan at this time? PTA has been deliberating on this question for a while. Recently PTA asked major technology stakeholders (equipment makers, mobile companies) to share their view points on 3G licensing and roll-out. The presentations have been posted at the PTA website. Telenor CEO has talked to press about his views on 3G, covered here. Take a look at few points from a presentation by another one of the major mobile company. The argument presented is that conditions are not suitable for 3G in Pakistan and the data revenue potential does not justify investments needed for 3G. They recommend to either defer spectrum allotment or give partial spectrum at nominal cost. Can you guess which mobile operator is this?
3G Situation in Pakistan
Spectrum Cost
Option 1
Defer the allotment of spectrum for another 1-2 years (as per our recommendation May 2007)Option 2
Award 5Mhz of 3G spectrum to all MNOs at nominal cost (similar to WiMax spectrum fee )
Why?
According to PTA released numbers the total mobile subscribers in Pakistan crossed 76 million. During 2006-07 the revenue of mobile industry was Rs.133 billion, an increase of 48% from previous year. The 4.12 billion US dollars of foreign investment poured in the telecom industry in the past year has been a major driver of this growth.
This is certainly a big achievement and PTA deserves a pat on the back. The challenge of course is to sustain this growth in a fair manner to all and not at the cost of the basic rights of consumers. Lets all remeber the basic point that consumers in Pakistan deserve good service at competitive rates. PTA must not allow the quality of service fall below reasonable standards.
In this issue:
China will allow foreign handset manufacturers to compete for their huge market, reports Shanghai Daily. China now has more than 500 million mobile-phone subscribers and is adding an average of about 6.8 million subscribers per month, according to the Ministry of Information Industry.
China announced that it would relax license regulations for handset manufacturing. China’s State Council has abolished some 186 administrative examination and approval items covering mobile communication systems and terminals. Now is the time to let the market rule and see qualified new players replace the market positions held by established companies which depended heavily on the income from renting licenses to other companies, according to United Securities. The new players such as Tianyu, largely unknown by established industry players, have challenged and even surpassed leading domestic firms like Ningbo Bird and TCL Communications.
At PT/EXPO COMM China 2007, a telecom tech fair held in Beijing, SK Telecom offered tech-savvy Chinese consumers a taste of their mobile future. Using a Chinese-developed mobile telecommunication technology called TD-SCDMA, Korea’s largest mobile phone operator showcased international video telephony and high-speed mobile multimedia functions such as video on demand and real-time TV. SK Telecom is expected to accelerate a foray into the Chinese telecom market after becoming the second largest shareholder of China Unicom.
Pakistan’s smallest cellular phone company by subscriber numbers, Instaphone has may have been sold to SK Telecom of South Korea with management control and majority shares, according to unofficial sources.
This was first posted at TGP by Uzair Ahmed. See my previous coverage of this topic. The official notification and details from SK Telecom is yet to be made so this deal is not certain yet.
As reported in the local media.
We had news of SK Telecom biding for Pakcom, which operates with brand name of Insta Phone in Pakistan. The situation got clearer in recent days when the officials confirmed the news. And now we are in good position to quote that Instaphone has been sold to SK Telecom. The details of the agreement are not made public; however, the agreement confirmation has arrived from both sides.
Mr. Shahid Feroz, CEO Insta Phone Pakistan, commenting on the acquisition said that this would be the opening of another success chapter in Pakistan’s telecom market. However, he didn’t reveal the details of the contract, but he was optimistic that the final agreement will be duly signed with in one month’s time. Mr. Feroz disclosed some of SK Telecom’s plan for Pakistan market. He said that the company is willing to rollout country’s first 3G network. He also told that the management rights will also shift away to SK Telecom along with majority of shares in Pakcom.
Insta Phone, which started its service back in 1990, hold 350,000 customers in Pakistan, operates using TDMA technology. Sources have told that Assessment of Pakcom was prepared by Hongkong and Shanghai Banking Corporation Limited (HSBC) and Deutsche Bank of Germany.
SK Telecom revealed three key business areas to be concentrated on. These are the furtherance of their global reach by expanding internationally, developing the convergence of telecommunications and broadcasting, and searching for new business opportunities.
With an aim towards becoming a major player in information communication under an economic umbrella that will be over all of East Asia, SK is actively seeking multifaceted business opportunities in overseas markets.
Established in 1984, SK Telecom has a number of interesting networks under its belt including CDMA 2000, HSDPA etc. True to the uniqueness of South Korean market, the company offers a number of wired/wireless and application services.
Spotted this at RegulateOnline. The news item suggests that a new competition commission is in the making which may take over the pricing policy responsibility from PTA. However the details about the division of regulatory authority between PTA and the new competition commission are unclear. Apparently the telcos are upset about the lack of openness about the process.
An article in Pakistan’s Daily Times reports that the country’s telecom operators are in favour of the government’s move to replace the Monopoly Control Authority with an independent competition commission, but are concerned that “secrecy around the process is making the whole exercise counter-productive”.
According to the Daily Times operators are asking for a transparent consultation process “to ensure that this new regulatory body will have well-defined areas of authority”. According to the article the new commission “is likely to restructure the required law and initiate step-by-step changes in price management policies for the local market, which includes price monitoring, determination of demand, supply and production levels and implementation of policies with the help of private sector.”
Daily Times adds that the ministry of law and finance has jointly prepared the draft of the ordinance, which is currently with the Prime Minister.
According to Daily Times, Telenor has won the first USF bidding which was for Malakand area. There will be other biddings for Sukkur, Sibi, Chaghi, DG Khan and Attock. I hope the first phase work starts soon.
For more background on USF plans in Pakistan, see this prior post. More from the paper:
Telenor Pakistan won the final stage of technical and financial bidding for Universal Service Fund (USF), leaving Pakistan Telecommunication
AuthorityCo Limited (PTCL), Warid Telecom and CMPak out of the competition, industry sources told Daily Times on Wednesday.Sources said Warid Telecom and CMPak were unable to qualify for the technical bid. While in the financial bid for 1,200 villages of the Malakand division, on the higher end PTCL bid was Rs 1,748 million and Telenor’s was Rs 310 million, giving no choice to USF but to announce Telenor as the winner of the first bid decision. The decision will be announced within a couple of days.
I am sharing a piece about WiMAX in Paksitan, which I wrote for All Things Pakistan. As this is an overview, some of the information here may already be in my previous WiMAX posts.
Pakistan’s telecommunication industry - mobile communication in particular - has made impressive strides in the last few years after deregulation. However broadband growth in the country has been very disappointing - there are less than 100,000 broadband users in Pakistan. The open competition observed in mobile industry has not been replicated to broadband. Reasons include high prices, control of PTCL over bandwidth resources, policy issues, lack of infrastructure and legal disputes.
Enter WiMAX. Simply stated, it’s a relatively new standards-based wireless technology which is intended for large coverage areas on the order of several kilometers (instead of a few hundred meters, as is the case with Wi-Fi).
With base stations transmitting signals and some equipment at customer location, it promises fast bandwidth for both fixed locations and mobile users. In this backdrop, Pakistan made headlines in 2006 when Wateen announced plans to work with Motorola to rollout Mobile WiMAX, the largest network of its kind in the world.
Is WiMAX (Worldwide Interoperability for Microwave Access) the right technology for developing countries? In other words, will this new technology deliver the promise of broadband at affordable prices?
WiMAX comes with many theoretical advantages but its potential is yet unproven. Without getting too technical, it is purpose-built for Internet (IP) communication and is based on standards (as opposed to other proprietary solutions) endorsed by a respected world standards body, the Institute of Electrical & Electronic Engineers (IEEE)*.
Daily Times has reported this interesting statement. As we have been discussing, Etisalat’s last transaction (26% shares and management control) is under scrutiny these days in Pakistan. Now Etisalat is thinking about taking its stake to 51% to get full control. How will the market react to this? And how much will this lift up the PTCL stock?
The news item adds:
The state-owned United Arab Emirates company is now considering whether to increase that to 51 percent by buying more stock from the government, Etisalat Chairman Mohammed Hassan Omran said in a telephone interview with Reuters in Dubai.
“We are evaluating that option and once we’ve arrived at the decision that this is positive, we will talk to the government,” Omran said, declining to give further details.
Pakistan, the world’s third-fastest growing market for mobile phone users, has a moratorium on the sale of new mobile licences. The only way for international companies to enter the world’s sixth-most populous nation is by buying into existing operators.
“We are already in Pakistan, so if we have an additional share this will add to our array of operations,” Omran said. Etisalat has no immediate plans to spend on PTCL’s infrastructure, Omran added.
An article in Wall Street Journal today talks about the Pakistan economy, entrepreneurs and money from aborad in the forms of aid, remittances and expat investments. The title is “In Turbulent Pakistan, Start-Ups Drive a Boom” and it talks about the apparent paradox: Pakistan’s political scene is growing more clouded, but a clear demonstration of confidence in the country’s future is coming from an emerging economic force: Entrepreneurs. Since 1999, Pakistan has become one of Asia’s fastest-growing economies, the article mentions.
The article briefly mentions the growth in Telecom but does not go in the details of how the growth in telecom has provided additional jobs and opportunities for the public. I think more details on Telecom’s contribution to Pakistan’s economic growth would have been an interesting point in this article. A separate study estimated that the mobile industry has created 220,000 high-paying jobs in Pakistan and accounts for 5% of its Gross Domestic Product (GDP) and approximately 6% of the total taxes collected by the Central Board of Revenue.
Some excerpts are given below. I disagree with the ‘credit-friendly banks’ line - the banks in Pakistan have acted as aggressive loan pushers and have made tremendous fortunes at the expense of common people. However the point about the importance of younger generation is very true and businesses - including telecom companies - seem to be aware of this market segment.
Pakistan now permits 100% foreign ownership of its banks, prompting more consumer-friendly lending for home mortgages and cars. Meanwhile, a telecommunications monopoly has been broken up and policies have been tweaked to reduce user fees. Cellular subscribers have expanded 94% a year since 1999.
Not all are convinced the economic traction is sustainable, though. While Pakistan has seen an unprecedented consumer boom, 7.9% inflation and a sluggish job market have undercut modest income gains, contends ABN Amro’s senior economist in Islamabad, Sakib Sherani. In luring new industries and cultivating a broad-based business class that will keep the economy globally competitive, Pakistan lags behind countries such as Vietnam, as well as China and India, Mr. Sherani says.
Many critics also contend that substantial amounts of U.S. assistance — estimated at more than $1 billion a year — may be the biggest underlying reason why Pakistan’s economy is doing well. But the economy is also sprouting from the bottom, thanks to seed capital from abroad and more credit-friendly banks. Last fiscal year, Pakistan received a record $5.1 billion in foreign direct investment, the government says. Overseas remittances, which are what Pakistanis are returning from bank accounts overseas, hit $5.5 billion in the same period, also a record.
By sheer demographic weight, the younger generation will determine Pakistan’s direction. Of its 160 million people, 100 million are under the age of 25. Many are rural, poor and unprepared for a role in the global economy. But fast economic growth has also drawn more men and women to the cities, propelling some up the income ladder through education and new jobs.
Source: WSJ (subscription required)
This blog was started by Babar Bhatti to share and analyse new and interesting developments in Pakistan Telecom industry. More ...
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